We talk to Interactive Brokers in Singapore about the firm's approach in serving external asset managers/independent wealth managers. To some extent, it competes against traditional banks and this appears to be a growing trend.

In our coverage of external asset managers and family offices, we referred to how the traditional custodial role of banks is being challenged by non-bank players. In the following article, we talk to Interactive Brokers about the work is does in this sector. 

(For more articles in the series on EAMs in Singapore, click here and here here, and here.) Nominations are open for the Fourth WealthBriefingAsia EAM Awards, 2025, with the public announcement in Singapore, on 16 October.

The interview is with Yujun Lin (pictured), CEO at Interactive Brokers Singapore.

The firm doesn’t charge custody fees - asset managers can custody their assets and their clients’ assets directly with IB. It offers asset managers the ability to keep their assets with a custodian bank if required by law to do so, while still allowing those assets to be pledged for margin trades at Interactive Brokers. 

Assets under custody at Interactive Brokers get the extra income when clients give it permission to lend out the stocks; it pays the highest interest rate in the market for idle cash, Lin said.

“While we don’t comment on specific clients, I can tell you that EAMs continue to choose Interactive Brokers because of our turnkey custody platform, which includes no custodial fees, no ticket charges, no minimums and no technology, software, platform or reporting fees. As of the end of 2024, advisory firm assets represented 18 per cent of client equity globally at [the firm],” he said.

Lin said the EAM/[US] registered investment advisor business is one of “our five key client segments, which consist of: individuals, proprietary trading firms, hedge funds, advisors/EAMs/RIAs and introducing brokers”.

EAMs most appreciate Interactive Brokers’ purpose-built account structure, access to more than 160, markets, free custody, low commissions, high interest on idle cash and institutional-grade foreign exchange conversion rates. 

Lin said Singapore’s Variable Capital Companies structures have been very positive for the EAM market.

“They offer confidentiality, segregation of assets, flexible fund raising/redemption, re-domiciliation, and tax efficiency. The Interactive Brokers platform is essentially plug-and-play for EAMs that are managing client assets using VCCs,” he said. 

The compliance challenge
“Singapore has always been at the forefront of having stable and business-friendly regulations while remaining a top-tier jurisdiction in terms of corporate governance and transparency,” Lin continued. AML/KYC has always been important but has recently gained even more importance due to global sanctions. Cyber/data security issues are also increasingly urgent due to growing digitalisation and the threat of quantum supremacy in encryption,” he said. 

Asia’s importance 
Lin said that the Asia-Pacific is a strong growth driver for Interactive Brokers globally, accounting for 40 per cent of client accounts as of 30 December 2024. More than 85 per cent of new client applicants come from outside the US. 

Concluding, Lin said technology and a stress on trading innovation is in the firm’s “DNA” for decades.

“We have…implemented artificial intelligence in searching for and summarizing information on our trading platform, allowing our clients to focus on delivering high value-add to their client and the ecosystem. Asia is by no means monolithic, and we see that our global trading and custody platform has a tremendous advantage to scale up in a highly fragmented region,” Lin added.